Senior living can be costly, but with a little creativity, you can find multiple options to help you pay for this expense. You might also not need as much money as you think. Senior housing developments include some costs that you have to pay for out of pocket, while you still live in your own home.
For example, if you pay $100 a month to have your grass cut, you will most likely not have this item as a separate expense at the facility. If your monthly bill at the senior housing development includes some meals, that service will replace some of your current costs as well. Nonetheless, you will need to figure out how to pay for assisted living or a nursing home. Here are some options:
Some people have enough money from their current income to pay for living in a senior community. For example, a person who receives $2,000 a month from Social Security, $4,000 a month from an annuity, and $1,000 a month in interest, dividends and investment income can use current income to pay for a facility that charges up to $7,000 a month.
For many people, current income is insufficient to cover the entire cost of a senior housing development. Let’s say that your current income is $3,000 a month and the assisted living center charges $5,000 a month. If you have enough savings, you can supplement your income to make up the difference. At $2,000 a month, you will have to spend $24,000 a year of your savings to live in senior housing.
Proceeds from Sale of the Home
Quite a few people plan to sell the large family home and downsize into a senior apartment or other development, when they retire. Proceeds from the sale of your home can go a long way toward helping to pay for senior housing, depending on the amount of equity in your house.
Reverse mortgages are not for everyone. There have been shocking scandals, in which unscrupulous lenders heartlessly took the entire nest eggs of older adults who did not understand all the terms and conditions of reverse mortgages. Be sure to check with multiple sources, like your state’s attorney general office and a trusted financial advisor who has nothing to gain from you getting a reverse mortgage, before agreeing to one of these arrangements. Read every word of all the documents and do not sign until you understand every detail.
If you find yourself in urgent need of assisted living, you might get a bridge loan to cover the costs of senior housing until your house sells. Compare the interest rate and terms of a bridge loan to a home equity line of credit.
If you or your spouse served in the military, you might be eligible for Veterans Administration (VA) programs like Aid and Attendance. This program can help pay for nursing home care, assisted living, in-home care and memory care.
Long-term Care Insurance
Although fewer than three percent of Americans buy long-term care insurance, those who do can use the benefits to pay for assisted living, memory care, or a nursing home, depending on the coverage. Be sure to read the terms of the policy with great care, particularly about how long you can receive benefits and for what services.
After you spend down most of your assets, you might qualify for Medicaid. No organization pays for more people to live in senior housing than Medicaid does. Every state has a different Medicaid program, and each one has its own eligibility requirements. It is a good idea to talk with an elder law attorney in your area about how your state’s regulations differ from the general law of this article.
A Place for Mom. “How to Finance.” (accessed April 14, 2019) https://www.aplaceformom.com/planning-and-advice/articles/financial-assistance
Suggested Key Terms: how to pay for the nursing home, how to pay for assisted living